This Article is From Apr 17, 2020

RBI's Steps Will "Improve Credit Supply", Help Farmers And Poor: PM Modi

Coronavirus: "Today's announcements by the RBI will greatly enhance liquidity and improve credit supply," PM Narendra Modi said

RBI's Steps Will 'Improve Credit Supply', Help Farmers And Poor: PM Modi

Coronavirus Lockdown: PM Narendra Modi said RBI's announcement is in the right direction

New Delhi:

Prime Minister Narendra Modi tweeted in support of the Reserve Bank of India today after the central bank announced a series of measures to revive an economy struggling amid the coronavirus lockdown. The Prime Minister, who this week extended the nationwide lockdown till May 3, said the RBI's measures would "greatly enhance liquidity and improve credit supply" and help farmers, small business owners and the poor.

The RBI's announcement came a day after Prime Minister Modi met Finance Minister Nirmala Sitharaman over concerns about the economy and plans to jumpstart its growth post the lockdown.

"Today's announcements by the RBI will greatly enhance liquidity and improve credit supply. These steps would help our small businesses, MSMEs (micro, small and medium enterprises), farmers and the poor. It will also help all states by increasing WMA (a credit policy to provide state governments with cash flow issues)," the Prime Minister tweeted.

Hours earlier the RBI Governor, Shaktikanta Das, addressed a video conference in which he cut key deposit rates for a second time in three weeks to encourage banks to increase lending.

The RBI cut its reverse repo rate by 25 basis points (bps) to 3.75 per cent with immediate effect. The rate had already been cut by 90 bps on March 27.

The reverse repo rate is the rate at which the RBI borrows from commercial banks and is a monetary policy tool that can be used to control supply of money in the economy.

On Tuesday Prime Minister Narendra Modi, while announcing an extension to the lockdown, said his government would ease restrictions on industries in rural areas, farming and e-commerce firms after April 20.

The government is also expected to allow construction of roads and buildings in rural areas, a move that is likely to help tens of thousands of migrant labourers and daily wagers hit hard by the economic shutdown.

Earlier this week the International Monetary Fund (IMF) projected a 1.9 per cent growth rate for 2020, while warning the global economy could shrink by as much as 3 per cent.

However, the IMF also had some good news for the Indian economy, indicating that it was expected to grow by a healthy 7.4 per cent next year.

The coronavirus outbreak has infected over 13,000 people across India and been linked to 437 deaths.

Worldwide the virus, which originated in China's Wuhan district in December last year and has caused an estimated loss of around $9 trillion to global GDP in 2021 and 2022, has infected over 21.5 lakh and killed 1.44 lakh.

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